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C D S L
Our verdict on C D S L isn’t the consensus take — see where we landed, and the one risk the bull case glosses over.
See the verdict — free →Does management do what it says?
The company has grown its KYC record base to over 8.57 crore, exceeding the previously noted target of 8.20 crore. (5 exceeded across 5 tracked commitments)
“And once they start off in this financial, year, we will see more revenues coming from there. On the eSign business, the way it functions is that we do not tie up with the end customer who is a participant or the broker, but there is a third-party service provider, who gives the entire onboarding solution to the end client and eSign is just a part of it.”
The impact of the price reduction (implemented in October 2024) was visible in Q3 FY25, contributing to a 29% quarter-on-quarter decline in transaction income. (3 met across 3 tracked commitments)
“And you will be able to see a full quarter impact from the next quarter onwards.”
See the full cited Management analysis of C D S L
How durable is the business?
The network effect is expanding as the total demat account base crossed the 15 crore milestone, though the pace of new additions (Net A/c opened) moderated to 64 lakhs in Q4 from 92 lakhs in Q3. (5 expanding)
“First depository to cross the milestone 14.50+ crore demat accounts... Became the First Listed Depository in Asia Pacific Region”
Annual Issuer Income continues to expand as the primary stable revenue pillar, growing 7.4% sequentially from Q3 to Q4 FY25, and significantly up from the previous year's quarter. (5 expanding across 1 engine)
“Annual Issuer Income Q3FY26: 113; Q3FY25: 81”
See the full cited Business Model analysis of C D S L
Where does growth come from?
The number of companies (issuers) using CDSL services is accelerating, with a sharp jump to 24,858 in Q1FY25, up from 23,060 in the previous quarter, driving recurring annual income. (5 accelerating across 5 signals)
“NUMBER OF ISSUERS ... Q3FY26 46,271”
Technology spending has seen a significant jump to handle higher market volumes and new settlement cycles, with annual tech costs rising 65% year-on-year. (5 accelerating across 5 signals, 2 leading indicators)
“Introduction of Direct Pay-out of Securities in investor’s demat account”
See the full cited Future Growth analysis of C D S L
What could break the thesis?
Transaction charges have declined for two consecutive quarters, falling from ₹83 crore in Q2FY25 to ₹59 crore in Q3FY25, and further to ₹49 crore in Q4FY25, indicating a significant slowdown in market-linked revenue. (3 intensifying, 2 easing, 1 high-severity)
“Transactions Charges: Q3FY25 59, Q4FY25 49, Q1FY26 62, Q2FY26 59, Q3FY26 60”
IT costs increased to ₹26 crore in Q1FY26 (Consolidated) from ₹24 crore in Q2FY25, while standalone IT costs jumped to ₹26 crore from ₹18 crore in Q2FY25, showing persistent upward pressure. (4 intensifying, 1 stable, 1 high-severity)
“So, it gone from about 7% of revenue to 14%. So just looking backwards in terms of what this has enabled for us, could you give us some sort of, some KPIs in terms of success rate on transactions or capacity of transactions that CDSL is able to handle as a result of the increasing investment intensity?”
See the full cited Risk analysis of C D S L
Read the full thesis on C D S L
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